How Do You Calculate Payroll Amounts?

Calculating payroll amounts is something that you do by looking at the employee's salary and taking a few other things into consideration. Find out about how you calculate payroll amounts with help from a senior financial analyst in this free video clip.

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Hi, I'm Jackie Jackson, and I'm going to talk to you about how you calculate payroll amounts. Now when you're determining how much money is going to go in to the payroll and then turn in to the employee's check, you have to not look at just the employee's salary you also have to look at all the amounts that you have to withhold from the check which include both the state and federal taxes as well as the mandatory employee contributions to Medicare and social security. So your first step is to look at your specific employee's profile and determine how many deductions that they're eligible for. For example your employee might have a child, they might have a dependent spouse, these are all items that make them eligible for deductions under the federal and state tax laws. So that's your first step. Next you're going to determine if they are eligible for paying social security. Under new laws there is a max salary that makes an employee required to have a social security contribution. If they are below that amount then they might not be eligible so make sure that you've reviewed the current amount. And then finally you need to determine how much they are going to have to contribute to Medicare.